A Professional and Comprehensive Property Valuer
The International Valuation Standard Committee, London, UK, has enacted the International Valuation Standard (IVS). The three principal objectives of IVS are:
(a) To facilitate cross-border transactions and contribute to the viability of international property markets by promoting transparency in financial reporting as well as the reliability of valuation performed to secure loans and mortgages, for transactions involving transfer of ownership, and for settlements in litigating or tax matters;
(b) To serve as professional benchmark, or beacon, for valuers around the world, thereby enabling them to respond to the demands of international property markets for reliable valuations and to meet the financing reporting requirements of the global business community; and
(c) To provide standards of valuation and financial reporting those meet the needs of emerging and newly industrialized countries. (IVS, 2005).
In the IVS “land is defined as the physical land and those human-made items, which attached to the land. It is the physical, tangible ‘thing’ which can be seen and touch, together with all additions on, above, or below the ground” (IVSC, 2005).
According to Agenda 21 of the UN Department of Economic and Social Affairs, land is defined as a physical entity in terms of its topography and spatial nature, and with a broader integrative view, it also includes natural resources: the soils, the minerals, water and biota that the land comprises. This description has accomplished the definition of land that we have commonly used in valuation; land “includes not only the ground, or soil, but everything that attached to the earth, whether by course of nature, as are tree and herbage, or by the hand of man, as are houses and other buildings. It includes not only the surface of the earth but everything under it and over it” (Foss, 2005).
IVS Methodology for valuation of land or real estate is on parcel basis for mortgages valuation, transactions involving transfer of ownership and for settlement in litigation or tax matter etc. (1) As a consequence of global land / real property management notion, the Methodology for valuation on the area or zonal basis which will be additional skills the property valuers can possess as per the United Nations Agenda No. 21 Land Definition.
The land or real estate valuation is fairly familiar to Property valuers. But, it is apparently believed that the skill in the valuation of zone-based functional lands (i.e. parks, eco-tourism sites, etc.), natural resources and the environment (renewable and non-renewable, tropical forests, sanctuary zones, botanical gardens, mangrove areas, catchments areas, etc.) is not commonly possessed by the surveyor. Those above reasons make it necessary to the need of professional and comprehensive land valuer-surveyor for the shake of the holistic concept of the land management.
The value of the land resource shall be seen from every substance. Essentially every piece of land resource (land as though vacant or property as improved) has three values embedded: (a) its market value, (b) its non-market value, and (c) its eco-natural resource economic value. For small size parcel, it is likely that the first two values are more prevailing ones. Nevertheless, for the zonal basis land resource, especially for the functional zone, its eco natural resource economic value should be taken into contemplation (1)
It is expected by the 2011 fiscal year, the Direct Tax Code (DTC), International Financial Reporting Standards (IFRS) will come into force and the Institute of Chartered Accountants of India (ICAI) appears to be ready with Indian Accounting Standards (AS) and it is further expected that appropriate accounting standard will reflect in our valuation.
(2) The Central Board of Direct Taxes (CBDT) plans to intensify discussions with the ICAI to examine the direct tax issues arising out of the proposed convergence of the Indian Generally Accepted Accounting Principles (GAAP) with IFRS. (2)
This is the correct time Institutions like Institution of valuers, Practicing Valuers Association of India and Institution of Government Approved Valuers, etc. can take up the matter and clarify the position of Registered / Approved valuers to Professional and comprehensive valuers.
It is suggested if a practicing Approved valuer is recognized as a Professional & Comprehensive valuer, a professional training in natural resource and environmental valuation can be arranged by a Professional Association.
For the future community, it is further suggested, the Surveyor Institute Examination (Calcutta, India) and Master Degree in valuation Programs can address the natural resource and environmental subjects so that an Indian Valuer can be a fit person and render her / his professional servise in a global notion.
Notes:
(1)Valuer’s Profession and Real Estate Taxation. Johanes P. Tamtomo Land Valuer-Surveyor - towards Acknowledged and Comprehensive Land Valuer-Surveyor. FIG working week 2009. Surveyors Key Role in Accelerated Development. Eilat, Israel, 3 – 8 May 2009
(2) The Hindu BusinessLine Dated 5th, March 2010 PP 17
A. M. Ibrahim
